Price and Wage Setting in Portugal: Learning by Asking

36 Pages Posted: 6 Apr 2011

See all articles by Fernando Martins

Fernando Martins

Bank of Portugal - Research Department; University of Lisbon - School of Economics and Management; Universidade Lusíada, Lisboa

Date Written: April 1, 2011


This paper presents the main findings of a survey conducted on a sample of Portuguese firms. The main aim was to identify some relevant characteristics about the dynamics of prices and wages in Portugal. The most important conclusions are: i) changes to wages are more synchronized than changes to prices; ii) most wages are defined using inflation as a yardstick, even though there are no formal rules; iii) the wages of most workers are defined in terms of sector-related collective agreements; iv) a considerable proportion of workers receive wages above those been agreed under the collective agreement; v) firms make frequent use of other mechanisms to cut payroll costs as a way of overcoming the restrictions imposed by downward nominal wage rigidity.

Keywords: survey data, wage rigidity, price rigidity, indexation, institutions

JEL Classification: D21, E30, J31

Suggested Citation

Martins, Fernando, Price and Wage Setting in Portugal: Learning by Asking (April 1, 2011). ECB Working Paper No. 1314, Available at SSRN:

Fernando Martins (Contact Author)

Bank of Portugal - Research Department ( email )

Av. Almirante Reis 71, 6th
Lisbon 1150-012

University of Lisbon - School of Economics and Management ( email )

Rua do Quelhas, n.º 6
Lisbon, 1200-781

Universidade Lusíada, Lisboa ( email )

Rua da Junqueira, 188 - 198
Lisboa, 1349-001

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